Experts Say Announcement Could Mean More False Hope For Leaseholders

Developers have been given an early March deadline to create a fully funded plan of action to help the cladding crisis, with further measures to be put in place by the Government.

The announcement from Michael Gove MP at the House of Commons this afternoon (10 January) said he is giving developers the chance to ‘do the right thing’ or he would ‘impose in law’ ways to make them pay for the cladding crisis.

So far residents in blocks 11-18m high haven’t been eligible for government support to remove unsafe cladding, instead being offered loans to shoulder the often eye-watering cost – but this scheme is now scrapped, along with further measures to ease the standstill for leaseholders affected by surveys, insurers and market uncertainty as a result of the crisis.

Residential property experts at Irwin Mitchell say the announcement shows the Government has shut the door on providing its own funding to help leaseholders, instead relying on developers to pay for the cladding crisis.

Expert Opinion

“The sentiments and ambition of Mr Gove’s statement today were praiseworthy and long overdue. The realities of his proposals are, however, as yet of questionable efficacy and breadth.

“The truth is that the fifth anniversary of Building Safety reaching its current level of crisis for leaseholders in taller blocks of flats in particular is fast approaching. The acknowledgement today that reaction to date has been slow and ineffective will be cold comfort, particularly in relation to those with non-cladding issues. Government must indeed accept when its own performance has not been acceptable and ensure a rapid improvement.

“The cladding on Grenfell had nothing to do with current or historic developers of new build homes, having been retro-fitted many years after the original build, using materials that were clearly dangerous that seem to have been ignored or waved through by the regulatory authorities.

“The idea that responsibility for resolving the cladding scandal – which has now widened to become a general building safety scandal - should be laid solely at the doors of developers asked to voluntarily cough up more cash, is likely to lead only to further delay and heartbreak for leaseholders caught in dangerous or un-sellable properties.

“Many developers will be puzzled as to how and to what extent they can justify such expenditure on a ‘voluntary’ basis in the context of their obligations to shareholders, and a lack of direct responsibility, particularly given clear evidence of contributory negligence by others.

“As Irwin Mitchell have been saying from the outset, fixing dangerous buildings (of whatever height) should be dealt with as a priority using up-front Government money, with clawback provisions activated as soon as the extent and identity of all liable parties has been established under due legal process.” Jeremy Raj - Partner

Large housebuilding developers are already facing the Residential Property Developer Tax, which targets companies with annual profits of over £25m with a 4% tax to go towards cladding.

Legal experts point out that laying the blame at one person’s door doesn’t help the situation for affected leaseholders – or help with the long-term housing crisis the UK is currently facing.

Jeremy continued: “In the context of an acute national shortage of safe, suitable and environmentally sound housing stock, it will not help to demonise and threaten all developers if they can clearly see that the manufacturers and suppliers of those dangerous materials, the poorly resourced regulators and the industry as a whole, seem to be being let off the hook.

“It now seems clear that the Treasury has firmly shut the door to further funds being made available and that, along with Planning reform, a full upgrade and proper funding of Building Control remains a distant hope for the future.

“Nobody wants the leaseholders caught up in the post-Grenfell nightmare to continue to suffer, and it is right that they should be absolved of financial responsibility for making their buildings safe.

“However, significant issues relating to building safety remain in addition to the cladding problems and many of our clients do not appear to be helped by today’s announcement in resolving the problems with the homes they bought in good faith, expecting them to be safe to live in and easy to sell on.”

Last year Irwin Mitchell unveiled its cladding report, complete with insights from legal experts and selected residential property specialists, which includes a ten-point plan to end the cladding crisis. You can download the full report here.